Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Investment of Insurance Companies And IRDA Regulations mcq questions that explore various aspects of Investment of Insurance Companies And IRDA Regulations problems. Each MCQ is crafted to challenge your understanding of Investment of Insurance Companies And IRDA Regulations principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Investment of Insurance Companies And IRDA Regulations MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Investment of Insurance Companies And IRDA Regulations. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Investment of Insurance Companies And IRDA Regulations knowledge to the test? Let's get started with our carefully curated MCQs!

Investment of Insurance Companies And IRDA Regulations MCQs | Page 7 of 16

Discover more Topics under IC 89 Management Accounting

Q61.
What is the purpose of Regulation 9 in the context of exposure and prudential norms?

a.

To define exposure norms for investment assets

b.

To limit investments based on exposure norms

c.

To encourage maximum exposure to investee companies

d.

To provide flexibility in investment choices

Discuss
Answer: (b).To limit investments based on exposure norms Explanation:Regulation 9 is designed to limit insurer investments based on exposure norms. It provides exposure norms for different categories of investment assets and specifies maximum exposure limits for a single investee company.
Q62.
According to Regulation 9, what is the maximum exposure limit for a single investee company from all investment assets?

a.

5% of the investment assets

b.

10% of the investment assets

c.

15% of the investment assets

d.

20% of the investment assets

Discuss
Answer: (b).10% of the investment assets Explanation:The maximum exposure limit for a single investee company (equity, debt, and other investments taken together) from all investment assets under Regulation 9 shall not exceed the lower of two criteria: an amount of 10% of the investment assets and an aggregate amount calculated based on certain parameters.
Q63.
What does the exposure norm cover for all funds of Life Insurance business, One Year Renewable Pure Group Term Insurance business, and non-unit reserves of all categories of Unit linked life insurance business?

a.

Only equity investments

b.

Equity, debt, and other investments taken together

c.

Only debt investments

d.

Only unit-linked funds

Discuss
Answer: (b).Equity, debt, and other investments taken together Explanation:The exposure norm for all funds of Life Insurance business, One Year Renewable Pure Group Term Insurance business, and non-unit reserves of all categories of Unit-linked life insurance business covers equity, debt, and other investments taken together.
Q64.
According to Regulation 9, what is the purpose of limiting exposure to a single investee company?

a.

To encourage concentrated investments

b.

To minimize risk and ensure diversification

c.

To increase the profitability of investments

d.

To comply with regulatory requirements

Discuss
Answer: (b).To minimize risk and ensure diversification Explanation:The purpose of limiting exposure to a single investee company, as per Regulation 9, is to minimize risk and ensure diversification of investments. This helps in managing risks associated with concentration in a particular company.
Q65.
What is the significance of Industry sector norms not applying to investments in the Infrastructure facility sector?

a.

Encourages concentration in specific industries

b.

Ensures compliance with NIC classification

c.

Allows flexibility for investments in the Infrastructure facility sector

d.

Promotes diversification across industry sectors

Discuss
Answer: (c).Allows flexibility for investments in the Infrastructure facility sector Explanation:The statement indicates that industry sector norms shall not apply to investments in the Infrastructure facility sector. This allows flexibility for investments in the Infrastructure facility sector, enabling insurers to make investment decisions without being bound by industry sector norms.
Q66.
How is exposure to a public limited 'Infrastructure Investee Company' determined for equity investments?

a.

20% of outstanding equity shares (face value)

b.

20% of outstanding equity shares plus free reserves

c.

20% of outstanding equity shares or 20% equity plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower

d.

25% of outstanding equity shares

Discuss
Answer: (c).20% of outstanding equity shares or 20% equity plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower Explanation:Exposure to a public limited 'Infrastructure Investee Company' for equity investments is determined as 20% of outstanding equity shares (face value) or 20% of outstanding equity shares plus free reserves (excluding revaluation reserves) plus debentures/bonds, whichever is lower.
Q67.
Under what conditions can an insurer invest a maximum of 20% of the project cost of a Public Limited Special Purpose Vehicle (SPV) engaged in the Infrastructure sector?

a.

If the investment is in equity

b.

If the parent company guarantees the entire debt extended and the interest payment of SPV

c.

If the parent company has a rating of less than AA

d.

If the Net worth of the parent company is less than Rs. 500 crores

Discuss
Answer: (b).If the parent company guarantees the entire debt extended and the interest payment of SPV Explanation:An insurer can invest a maximum of 20% of the project cost of a Public Limited Special Purpose Vehicle (SPV) engaged in the Infrastructure sector if the investment is in debt and the parent company guarantees the entire debt extended and the interest payment of SPV.
Q68.
What is a requirement for the guarantee provided by the parent company for investments in a Public Limited Special Purpose Vehicle (SPV)?

a.

The guarantee should exceed 20% of the Net worth of the parent company

b.

The guarantee should not exceed 20% of the Net worth of the parent company

c.

The guarantee should be equivalent to the Net worth of the parent company

d.

The guarantee is not required for such investments

Discuss
Answer: (b).The guarantee should not exceed 20% of the Net worth of the parent company Explanation:The guarantee provided by the parent company for investments in a Public Limited Special Purpose Vehicle (SPV) should not exceed 20% of the Net worth of the parent company, including existing guarantees, if any.
Q69.
What is the maximum limit for investments in securitised assets (Mortgage Backed Securities, Asset Backed Securities, Security Receipts) for life insurance companies?

a.

5% of Investment assets

b.

10% of Investment assets

c.

15% of Investment assets

d.

20% of Investment assets

Discuss
Answer: (b).10% of Investment assets Explanation:Investments in securitised assets (Mortgage Backed Securities, Asset Backed Securities, Security Receipts) for life insurance companies should not exceed 10% of the Investment assets.
Q70.
Under what conditions will an MBS/ABS with underlying housing or infrastructure assets be reclassified as Other Investments?

a.

If downgraded below AAA or equivalent

b.

If upgraded to AAA or equivalent

c.

If downgraded below AA or equivalent

d.

If it exceeds 10% of Investment assets

Discuss
Answer: (a).If downgraded below AAA or equivalent Explanation:An MBS/ABS with underlying housing or infrastructure assets will be reclassified as Other Investments if it is downgraded below AAA or equivalent.
Page 7 of 16